I am looking at a job ad on TEFL.com for KELT (formerly ILP Surabaya), for a teaching position. I'm not actually interested in the job at all, but I am interested in knowing what they mean when they say, "Housing, utilities and servants provided." SERVANTS? Really? Can I come to Indonesia and be waiting on hand and foot? The idea seems a little odd to me... can anyone clarify?

Schools that provide housing also usually hire a pembantu, a maid. She'll usually do chores such as cleaning, laundry, and cooking.

It's in the school's best interest, as they can hire a pembantu very cheaply. The teachers have more time to dedicate to the school - and of course the school has a ´spy´to keep an eye on the teachers....

one servant i had was SO lazy. wouldnt do ANYTHING. also caught him at 2.ooam in my bedroom trying to steal my wallet. man, did i kick his ass!. he also used to steal food. i put dish=washing liquid in his cooking oil after that. aaah revenge is sweet.

Both Kelt and EF in Sby provide "maids" in teachers' houses. There are a number of reasons for this including those that ISO650 mentioned.
If you have 4 adult teachers sharing a house and working together, then believe me, it really takes the pressure off. No bickering about whose turn it is to wash the dishes etc. They also don't go in much for washing machines here, so good luck getting up at four am to hand wash all your clothes. You get through a lot of them as it's so hot!
Also, the school can make sure that the house is well maintained and not left to ruin by slobby teachers. Another reason is security. When all the teachers go off on holiday at the same time (as happens at our school) then there is someone in the house to make sure your stuff is safe.
It is a part of the culture here to have "domestic help" even relatively poor people often have someone to help with the housework. Teachers here live fairly modestly compared with the insanely rich Chinese and Javanese who live with an army of maids, nannies, drivers and gardeners. The pembantus certainly DO NOT wait on you hand and foot. Well, unless you are a not very nice person and you force them to.
Most teachers who live outside the school houses only employ someone to come in a few times a week.
It is VERY weird at first to get used to these strange people in your house, but it certainly grows on you. I think that pembantus who work for teachers get a much better deal than those who work for some local families.
Anyway, I'm not trying to start a debate here about the rights and wrongs. I have struggled with that myself for 3 years! It's just another part of life here that you either accept or move out and live on your own. Reserve your judgement for when you get here, then you can make a decision.
One final thing. I work for Kelt and, now I think about it, we generally use the word "pembantu" or use their proper names to refer to them. Pembantu means "someone who helps" and doesn't have the same negative connotations as "servant". Why they use that on the ad, I don't know.

Having a pembantu works well all round, as far as I'm concerned. I get all my clothes washed etc., while providing a local with an income. The pembantu is the main income-earner in some households. It's expected that foreigners will get paid help in some form while they're in Indonesia.